TITLE
RESOLUTION APPROVING A LEASE BETWEEN THE STATE OF FLORIDA (STATE) AND CO-LESSEES, MIAMI-DADE COUNTY (COUNTY) AND FLORIDA INTERNATIONAL UNIVERSITY (FIU) AT THE COCONUT GROVE PLAYHOUSE, 3500 MAIN HIGHWAY, COCONUT GROVE, FL 33133 AND AUTHORIZING THE COUNTY MAYOR OR THE COUNTY MAYOR�S DESIGNEE TO EXECUTE THE LEASE, SUBJECT TO CERTAIN CONDITIONS AND AUTHORIZING THE COUNTY MAYOR OR THE MAYOR�S DESIGNEE TO EXERCISE ANY AND ALL RIGHTS CONFERRED THEREIN

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WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference; and

WHEREAS, as a condition of the State�s approval of the Lease of the Coconut Grove Playhouse property to FIU and the County, the State requires prior approval by the respective Boards of FIU and the County; and

WHEREAS, the terms and conditions of the Lease attached hereto as Exhibit A have been reviewed by staff at the County, the State and FIU; and

WHEREAS, it is contemplated that a separate agreement between FIU and the County will further delineate their respective rights and responsibilities in regard to the property, its operation and its programming, and that this separate agreement will be submitted to the Board for review and approval before the Lease becomes effective,

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that the Board authorizes the County Mayor or County Mayor�s designee to execute the Lease between the State and Co-Lessees, the County and FIU, in substantially the form attached hereto, and authorizes the Mayor or the Mayor�s designee to exercise any and all other rights contained therein, all subject to the following conditions:

1) Satisfactory progress toward resolution of any encumbrances affecting the title of the Coconut Grove Playhouse property through collaborative efforts by the State, FIU and the County; and

2) Review and approval by the Board of any expenses and corresponding revenue sources that may be necessary for the County to satisfy State or other prerequisites for the execution of the Lease; and

3) Approval of the execution of the Lease by the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida and by FIU�s Board of Trustees.

The County Mayor or Mayor�s designee is further authorized to determine whether such conditions have been met.

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Date:

To: Honorable Chairwoman Rebeca Sosa
and Members, Board of County Commissioners

From: Carlos A. Gimenez
Mayor

Subject: Coconut Grove Playhouse: Approval of a Lease with the State of Florida

STAFF RECOMMENDATION
Recommendation
It is recommended that the Board approve a Lease between the State of Florida (State) and co-lessees, Miami-Dade County (County) and Florida International University (FIU), in substantially the form attached. Pursuant to the State�s requirement, the Lease will not become effective until there has been satisfactory resolution of the encumbrances affecting the title of the Coconut Grove Playhouse property. The Lease is contingent upon the approval of the Board of Trustees of Internal Improvement Trust Fund of the State of Florida; FIU�s Board of Trustees already has approved delegation of authority to execute a Lease.

Scope
The Coconut Grove Playhouse is located in District 7 but the impact of re-establishing a regional theater is countywide.

Fiscal Impact/Funding Source
Any funding that may be required to satisfy State or other prerequisites for the execution of the Lease must first be reviewed and approved by the Board. The Background section of this Memorandum provides an update on these financial issues.

Funding for the eventual capital project to re-establish regional theater on the Coconut Grove Playhouse site comes from two sources: 1) $15 million from project number 299 of the Building Better Communities-General Obligation Bond (BBC-GOB) program; and 2) $5 million from Series 2005 of Convention Development Tax (CDT) bond proceeds. In addition, the Coconut Grove Playhouse Business Plan that is attached to the Lease commits the net revenue that will be generated by the operation of the Playhouse�s surface parking lot toward defraying the cost of theater operations and programming. The County Attorney�s Office will collaborate with the Administration to confirm the applicability of the funds and to revise the Business Plan and other documents, if necessary, prior to presentation to this Board for its approval.

Delegation of Authority
Authority for executing the Lease resides with the Mayor or his designee; authority for exercising all provisions contained in the Lease and applicable to Miami-Dade County is delegated to the Department of Cultural Affairs� Director.

Track Record/Monitor
The State and FIU have track records for working cooperatively and successfully with Miami-Dade County on a variety of issues and projects that benefit the public. Michael Spring, Director of the Miami-Dade Department of Cultural Affairs, is responsible for implementing the County�s rights and responsibilities under the Lease.

MANAGER'S BACKGROUND
Background

State of Florida

Many years ago, the State, then owner of the Playhouse property, deeded the property to the Coconut Grove Playhouse, LLC. In October 2012, the State exercised the reverter provision contained in the deed to the Coconut Grove Playhouse, LLC, and took back ownership and possession of the Playhouse property located at 3500 Main Highway, Coconut Grove, FL 33133. The State instituted its surplus property process on March 1, 2013, and pursuant to same, offered the property for lease to State colleges, universities or agencies, subject to ultimate approval by the State�s Board of Trustees � i.e., the Governor and Cabinet.

In response to the State�s solicitation, and after discussions with the County regarding potential partnership opportunities for the re-establishment of a professional regional theater on the site, FIU submitted a proposal to the State for development of the Playhouse property on April 15, 2013. This proposal was in the form of a Business Plan that was developed in consultation with the County. The Business Plan is Attachment B to the Lease. Central programmatic elements presented to the Board in previous updates were incorporated in the Business Plan, which additionally benefitted FIU�s College of Architecture and the Arts. In submitting the Business Plan to the State, FIU noted that, contingent on the State�s interest, the Business Plan would need to be approved by the Board of County Commissioners and FIU�s Board of Trustees.
Lease between the State of Florida and Co-lessees, Miami-Dade County and Florida International University

Staff at the Florida Department of Environmental Protection (DEP) has responded favorably thus far to the Business Plan. DEP staff is preparing to present the FIU-County expression of interest and Business Plan to the Governor and Cabinet at their meeting later this summer. The State�s surplus property process requires that a lease be executed within six months of the beginning date of the surplus property process, in this case a deadline of October 15, 2013. Consequently, the State has requested that FIU and the County approve the Business Plan in advance of the summer Cabinet meeting and be prepared to execute a Lease by October 15, 2013. The Business Plan and a delegation of authority to execute a Lease were approved by FIU�s Board of Trustees on June 12, 2013.

The following are highlighted business terms of the Lease agreement and the attached Business Plan:

* FIU and the County are co-lessees in the Lease agreement with their respective rights and responsibilities defined in the Business Plan.
* A separate agreement between FIU and the County will codify the rights and responsibilities of FIU and the County in regard to the property, its operation and programming, and this separate agreement will be submitted to the Board for review and approval before the Lease becomes effective. This agreement will include the provisions essential to the FIU-County partnership that are included in the Business Plan which is attached as Exhibit B to the Lease.
* The State requires that any encumbrances affecting the property�s title must be resolved within three months of the full execution of the Lease, which is by January 15, 2014, assuming the Lease is executed on the deadline of October 15, 2013. It should be noted that we are working with the State to explore the possibility of having additional time to resolve the encumbrances and the attached draft Lease reflects this approach, by including a date of May 15, 2014 for the County to resolve all encumbrances or terminate the Lease.
* Consequently, approval of the Lease by the County and FIU is subject to successful resolution of the encumbrances affecting the title of the Coconut Grove Playhouse through collaborative efforts by the State, FIU and the County (see section below, Encumbrances Affecting the Property Title).
* The County assumes responsibility for any costs associated with resolving these encumbrances. Prior to the deadline for resolving the encumbrances, the Board would be provided with an update and recommendation regarding any expenses that may be necessary in order for the County to satisfy State or other prerequisites for the execution of the Lease.
* The proposed term of the Lease is a minimum of 50 years with the State considering a request for up to two renewals of 25-years each; the Board�s authority is requested to execute the Lease whether or not the State agrees to any renewal terms.
* The County has the sole rights and responsibilities in regard to the implementation, decision-making and funding necessary to develop a regional theater on the site.
* The County has the right to manage the surface parking lot and the net revenue from its operation will be dedicated to the operations and programming of the theater, subject to confirmation regarding application of funding.
* The County will have the financial responsibility for the implementation of the Playhouse capital plan, for the theater�s operations and programming, or for any other costs associated with the property after the Lease is executed.
* Subject to review and approval of a bid waiver by the Board, the County will enter into an Operating Agreement with GableStage to operate, program and maintain the theater. GableStage will be responsible for all costs associated with the operations and programming of the theater.

It is important to note that the terms and conditions of the Lease and Business Plan are remain under review by the State and are contingent upon the approval of the Cabinet and Governor at their summer 2013 Cabinet meeting.

Encumbrances Affecting the Property Title

Given the State�s current requirements, the County will be required to satisfy and/or obtain releases of the property title encumbrances identified by the State. The County also will be responsible for resolving any subsequent issues that may arise affecting the property�s title. The following is a summarized update regarding the currently known encumbrances and related issues:

* City of Miami
The City of Miami has issued numerous Final Administrative Enforcement Orders which are referenced in the title work provided, as follows:

1. Case No. CE2008013495 � Citing failure to maintain exterior of property. Requiring correction by March 3, 2009 or providing for fines of $250 per day until compliance.
2. Case No. 0525914 � Citing nonconforming parking lot. Requiring correction by December 28, 2005 or providing for fines of $250 per day until compliance.
3. Case No. CE2010010661 � Citing parking lot nonconformance regarding off-street parking standards. Requiring correction by July 15, 2010 or providing for fines of $250 per day until compliance.
4. Case No. FF2010012659 � Citing vacant and unsecured structure. Requiring correction by September 23, 2010 or providing for fines of $250 per day until compliance.
5. Order of the Office of Hearing Boards dated February 18, 2011. Requiring payment of $4,500 for vacant structure.
6. Municipal Special Assessment in the amount of $6,881.25.

The total amount claimed by the City arising from the enforcement orders is not currently quantified. To date, the City has not responded to the State�s requests for the total amount claimed by the City under these cases. In addition, the City of Miami filed a lawsuit to foreclose upon another Final Administrative Enforcement Notice dated July 23, 2010 issued for graffiti on the property. Additionally, in the lawsuit, the City requested an assumption of the leasehold interest previously held by Coconut Grove Playhouse in order to recover for its code enforcement liens. The State was not a party to this lawsuit. On February 21, 2013, a Circuit Court judge entered a Final Judgment against Coconut Grove Playhouse in the amount of $216,250 (the amount of the liens as of the date of the judgment) plus interest at a rate of 4.75% per year after Coconut Grove Playhouse, LLC failed to appear at the hearing for entry of final judgment. The Court also has granted the City�s motion to appoint a receiver. The State has now filed a motion to intervene in this case, contending that the leasehold being sought by the City no longer exists after the State�s exercise of the reverter and its assumption of ownership and possession. To date, the City has not agreed to withdraw its lawsuit, or to relinquish its judgment or efforts to enforce its liens, or to take control of the leasehold interest, if any.

* Aries (GH Mortgage, LLC)
The State has contacted Aries and requested that Aries remove references in its $1.5 million mortgage for the separate Bicycle Shop property that come up as exceptions in the title work on the Playhouse property. It should be noted that the Bicycle Shop property did not revert to the State and that certain assignments of leases, rents and profits from the Playhouse property were used to secure the mortgage on the Bicycle Shop property between GH Mortgage, LLC and the Coconut Grove Playhouse, LLC. On May 14, 2013, Aries responded to the State that they had referred this matter to Aries� attorney. The State�s position continues to be that the Aries mortgage on the Bicycle Shop property does not constitute an encumbrance on the title of the Coconut Grove Playhouse property, although prior to the reverter, Aries asserted that its mortgage was secured by the Playhouse property.

* Other Judgments and Encumbrances
A number of other judgments are recorded as encumbrances in the title work of the Playhouse Property. These include:

Judgment held by Best Wholesale Office Products, Corp. in the amount of $1,957.74, plus 11% annual interest running from February 2007 as recorded at O.R. Book 25478, Page 4836;

Judgment held by Andri Chemical of America, Inc. in the amount of $2,052.63 plus 9% annual interest running from July 2006 as recorded in O.R. Book 24787, Page 3085;

Judgment held by Premier Printing Solution, Inc. in the amount of $49,942.34 plus statutory interest running from September 2010 as recorded in O.R. Book 27429, Page 674;

State of Florida Department of Revenue Tax Lien in the amount of $6,654.64 plus 12% annual interest yearly running from July 2007 as recorded at O.R. Book 25875, Page 1165; and

State of Florida Department of Revenue Tax Lien in the amount of $466.29 plus 12% annual interest running from June 2008 as recorded at O.R. Book 26427, Page 1848.

Additionally, the County holds tax certificates for special assessments which are currently unpaid as follows:

Folio No. 01-4121-045-0140 � Amount currently due - $25,308.60; and

Folio No. 01-4121-056-0031 � Amount currently due - $1,039.42.

State�s Contingency Plan

On May 24, 2013, the State sent a letter to FIU expressing its appreciation and support for FIU�s and the County�s work regarding the Playhouse property. As a contingency, in the event that FIU and the County did not execute a lease with the State by October 15, 2013, the State is planning to proceed with advertising the property for sale through a competitive bid process.

In a separate but related matter, in January 2013, Aries filed a five count lawsuit against the County. This suit does not appear to affect title of the Playhouse property, but instead, seeks monetary damages. The County filed a motion to dismiss the complaint. In response, Aries dismissed three of the five counts. The remaining counts against the County allege that the County tortuously interfered with Aries� contract and business relationship with the Coconut Grove Playhouse. The County will continue to defend against this action. In this same suit, Aries also asserted claims against Coconut Grove Playhouse, LLC for breach of contract.�

Attachments

__________________________
Lisa M. Martinez
Senior Advisor, Office of the Mayor